Great business concepts, adequate skill but no funds. Sounds like a story you’ve heard before. Lack of funds and innovative ways to source finances for startups has been shortlisted as one of the common crippling reasons to failing businesses.
Working capital is behind the long painstaking yet thrilling entrepreneurial journey from a concept to a revenue-generating venture. Every phase of the business demands finances to keep it moving. So, where should you source funds for your business?
Seek financial help from friends and family
Close friends and family members are a great source of support, at least for most people. You could consider approaching your most trusted friends and relatives for a loan. Talk to them about your concept and the potential the startup holds. You are likely to receive funds without any expected interests attached to it. In some cases, the money comes as a gift. Take your time and list a few good names that would be happy to see you thrive.
Talk to your local bank
You probably have a good relationship with your local bank. Depending on your credit history and your bank statements, you could be an excellent candidate for a loan. Contact your bank and set up an appointment with the loan officer. Prepare a business plan, dress professionally for the meeting, and explain how much you want for your venture. One can also look for a business acquisition loan to get better funding for the business.
The loan officer should consider your request as a dedicated client to the bank and revert on how much you qualify for the loan. If your first stop is unsuccessful, try applying for a personal line of credit from the institution. Test other banks and financial institutions, you never know where luck catches up with you.
Dig into your personal savings
If you have some money saved up for the rainy days, it could come in handy. Personal savings are quick access to funding your venture. This method is risky if the business fails since you will have no money to fall back to. However, looking at the positive highlights, you won’t have to give up any equity in your company.
You will also be safe from high-interest rates from the loans and credits. You could also use your personal savings as a compliment to funds borrowed to boost the business or convince partners it’s worthwhile.
Look for angel investors and venture capitalists
Venture capitalists will listen to your business concept and analyze its potential before investing a certain amount of money into your startup. They will request for equity shares in the company, making them partial owners of the business. On the other hand, angel investors look to plough profits from startup businesses and will invest in your venture in exchange for equity or convertible debt. If you decide to go with the investors’ option, prepare to present an electrifying business plan to convince them why your venture could be their best bet.
A journey of a thousand miles begins with the first step. Sourcing funds for your venture is undeniably one of the most taxing steps in the journey. However, with these tips mentioned above, you should find the right move to strengthening your startup.